by Michael Rodriguez

Last year was one for the ages with our industry funding $2.27 trillion in refis. But four out of five homeowners used a new lender on those refis. And purchase retention is no picnic either. Even homebuyers you’ve pre-approved increasingly get referred away before you close them. So 2021 must be the year retail and consumer-direct lenders solve these customer retention problems — because the market shifts from record refis in 2020 to mostly purchases by 2022. Below we show the shift and how to solve for engagement and retention.

From Record Refis In 2020 To 75% Purchase Units In 2022

The Mortgage Bankers Association (MBA) data says we did $3.69 trillion in 2020 origination volume, which is truly one for the ages since our industry did it working from home.

The $3.69 trillion was 61% refis and 39% purchases.

This volume will drop to $2.20 trillion by 2022, with a shift to 26% refinances and 74% purchases.

For lenders who prepare in 2021, this isn’t as stark as it looks for three reasons:

1. First, a $2+ trillion mortgage market in 2022 is still robust and provides plenty of opportunities. And we’ve still got a giant $2.96 trillion market this year!
2. Second, total purchase volume increases from $1.42 trillion in 2020 to $1.57 trillion in 2021 to $1.63 trillion in 2022
3. Third, while refi volume does plummet from $2.27 trillion in 2020 to $573 billion by 2022, there’s still $1.34 trillion in refis projected this year

This makes 2021 your transition year: retain refis while ramping purchases.

As for your purchase loan opportunity, total sales of new and existing homes are projected to rise from 6.49 million in 2020 to 7.29 million in 2021 and 7.43 million in 2022.

But if we zoom in on just the homes that are financed when sold, we can more precisely understand the opportunity set: the MBA predicts 5.04 million home purchase loans in 2021, and 4.99 million in 2022, with purchase units being 75% of the market in 2022.

So to recap:

• Refi volume is still strong this year if you can solve for customer retention
• Purchase volume is solid for the next two years if you can solve for customer engagement and conversion on these longer-lead customers

Below is a briefing on each problem and a single solution for both.

Pre-Approved Homebuyer Conversion Problem

Even the best retail loan officers have trouble keeping pre-approved customers from straying to other lenders.

Despite your loan officers introducing pre-approved customers to great local real estate agents, customers keep connecting with new mortgage lenders earlier in their home search at open houses or via online home searches. And those selling their homes as part of this process are searching out options via agents even earlier.

It’s even more challenging if you’re a direct-to-consumer lender. Despite your team being great at acquiring customers before they have a real estate agent, most likely your salesforce doesn’t have personalized local real estate agent connections.

Too often, this means your sales team pre-approves a borrower, wishes them luck finding a home, and asks them to reconnect when they’re in contract.

Then the pre-approved customer meets a local real estate agent who tells them to ditch their call center for a local lender who they have worked with before.

Or, they get picked off by a new lender while searching for homes online.

Post-Closing Customer Retention Problem

Meanwhile, your new home-owning customers (and new customers coming in via MSRs) too often get refinances, home improvement loans, and sell to buy a new home without telling you.

The latest Black Knight data show that 82% of all refinancers and 87% of cash-out refinancers (those home improvement types) are refinancing with new lenders.

This means you’re not retaining four of five refi customers, and those customers who are selling to buy a new home don’t start their home search with you in mind.

It’s hard to save a refi with late-stage credit pull triggers. And it’s even harder to capture a new home pre-approval after getting payoff demand or home sale triggers.

Triggers are a valuable part of the marketing mix, but customer engagement and retention must be about the home itself.

Make Customers More Attached To Their Homes, And To You

Your customer doesn’t have a personal relationship with the loan you made them, they have a personal relationship with the home you helped them buy.

And by powering your customer’s relationship with their home, you’ll retain refis and convert purchases.

To do this, you must have a Customer Engagement Platform that serves as a home dashboard throughout the buying, owning, and selling lifecycle.

In short, each phase works like this:

• Homebuyers can search using a modern platform co-branded with you, get instant pre-approvals, and transact on 100+ million homes in 50 states
• Homeowners can monitor home equity in real-time, act on money-saving tips, and plan/budget/borrow for renovations room by room
• Home sellers can estimate potential sales price within 2.5% accuracy, then connect with agents or iBuyers to sell

And you power the whole thing for your customers.

How To Win The Customer Retention War In 2021

You do it using ComeHome by HouseCanary.

ComeHome gives your customers a world-class, lender-branded experience for searching homes, getting loan offers from you, and managing their home using your site and mobile app.

As creator of the Customer Engagement Platform category in fintech, we believe it must provide all of this for home buyers, improvers, and sellers:

• Fully enterprise grade and lender/bank branded down to loan officer level
• Enhanced property search capability with access to the complete MLS inventory
• Mobile-first experience working natively wherever your brand engages your customers
• World class data helping homebuyers search and choose homes, neighborhoods, schools, etc.
• Homeowners can claim and evaluate their primary and all other owned homes
• Homebuyers or owners can tag favorite homes to keep an eye on them
• Homeowners can see equity in real-time
• Homeowners can see rate/term and cash-out refi options in real-time
• Valuations must be within approximately 2.5% accuracy to give you credibility and decision certainty
• Homeowners can budget improvements, model value impact, and hire contractors
• Homeowners can model sale scenarios
• Homeowners or buyers can instantly get pre-approved for loans with proprietary or third-party POS

And for you, the ComeHome customer engagement platform ensures:

• Direct salesforces and retail loan officers get a real-time lens on all activity customers are taking in their dashboard
• Customer facing implementation and integration in just days, including sites, apps, and email marketing
• Weeks, not months, for integrations into marketing, point of sale, origination, and servicing systems

The dual problems of refi retention and purchase conversion will be the great battles of 2021 and 2022.

And powering your customers’ engagement with their largest asset will help you win your customer retention war once and for all.